Offset – why you should consider it

"Brokers with a good understanding of offset and who it’s best suited to can differentiate themselves from other advisers and help increase the success of their business. "

Like me, you’re probably glad January is over, especially as it will mean the end of the ‘New Year, new you’ messages that we’ve been bombarded with.

However, I must admit that they’re onto something, as a lot of us will spend this time setting plans for the year ahead.

If you’re thinking about ways to expand your business for 2019, offset mortgages could be a great place to start.

The time is right

We all know that savings rates remain low, and this seems unlikely to change soon. That’s where offset can come in.

Borrowers won’t earn interest on the money in their offset savings account, but it can work harder than if they had a repayment mortgage and a standard easy access savings account. That’s because the gross offset benefit your client receives is equivalent to the mortgage rate charged.

Offset could make a real difference for your clients...

With offset, your client’s mortgage is linked to at least one savings account and the savings in this account offset the interest your client is charged. The client can then choose how they use the saving they make, either to reduce the term of their mortgage or to reduce their monthly payment.

Traditionally, offset has been seen as something that’s best suited to higher earners with a big savings pot already set up, or with lots of spare cash they can put away each month. It can be particularly helpful for these borrowers when they’re setting money aside to cover their tax bill or if they have a bonus they’d like to put away for now.

However, it can also be a fantastic option for borrowers with a smaller income. Saving even £50-£100 per month can have a big impact and give your clients the opportunity to pay off their mortgage early or reduce their monthly payments. These clients might benefit most from an easy access offset savings account, so they can easily dip into their savings if they need to.

Plus, offset can be a good choice for self-employed clients as there’s no income tax liability on Offset savings. These clients could also benefit from a linked easy-access savings account as they’re more likely to have an income that varies from month to month.

And it could be great for your business too!

Including offset as part of your advice offering can of course help more of your clients to find the right mortgage for their needs. But more than that, brokers with a good understanding of offset and who it’s best suited to can differentiate themselves from other advisers and help increase the success of their business. And who doesn’t want that?!

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